Key staff - fed up at the prospect of paying more tax and
perhaps even thinking of quitting the UK for abroad - could yet be
persuaded to stay, according to a tax expert.
Sarah Moss, a director at the Birmingham office of accountants
and business advisers PKF, suggests incentivising them with share
options.
She is urging companies to take a look at the Enterprise
Management Incentive (EMI) scheme or, if they are already taking
advantage, expand their activities.
Two new developments make this even more advantageous than was
previously the case.
Firstly, the Government plans to allow extra businesses to
qualify by being more liberal with the rules.
Currently a company's activities must be wholly or mainly in the
UK. It is proposed that from 6 April next year this will be relaxed
so that a company needs only to have a permanent establishment
here. This should help small and medium-sized enterprises with a
major overseas presence to recruit highly skilled UK-based staff
while also allowing their existing people to benefit.
Secondly, the EMI scheme has been provided with a greater sense
of permanency by the European Commission recently agreeing to grant
State Aid approval to the scheme until April 2018.
Ms Moss said: "The EMI scheme offers real opportunities and
seems now to be a fixture in tax planning discussions with a wide
range of owner managed businesses.
"Companies should make the most of it as a means of
incentivising key employees in a tax efficient, and Government
approved, manner.
"Given the tax increases for high earners coming in only a few
months now, employers need to have a close look at what they can do
to reward their key people in an attractive way.
"In difficult times when cash is tight the chance to incentivise
key staff with share options is perhaps something of a no-brainer.
They will be able to share in the value of business at some future
point in time, and so feel they have a real stake in what it is
trying to achieve. There is a goal there and they can see the
potential rewards.
"It means they are taxed more favourably and, so hopefully,
their motivation levels stay high.
"EMI is good for them and good for the company."